Caveat

A caveat is a notice registered on the title of a property by a person or company that claims an interest in that land without necessarily owning it. Recording a caveat tells anyone who searches the title — a buyer, a lender, or another lawyer — that a third party asserts a right affecting the parcel. Several Canadian provinces, including Alberta, Manitoba, and Saskatchewan, provide for caveats under their land titles legislation, where the registration appears as an encumbrance on the property.

What a caveat is used for

A caveat is broader than a lien, which normally secures an unpaid debt. A caveat simply gives notice of a claimed interest. Typical situations include:

• A buyer who has signed an agreement of purchase and sale but has not yet closed, protecting that contract right.
• A holder of an option to purchase, a lease, or a right of first refusal over the land.
• A party to a private arrangement, such as an unpaid vendor or a joint venture participant, asserting an interest.
• A mortgage itself: in some provinces, a mortgage is registered by way of caveat under the land titles system.

Why it matters to an owner or borrower

A caveat does not by itself mean the owner owes money, but it does cloud title. Lenders are generally unwilling to advance funds against a property with an unresolved caveat, and a buyer's lawyer usually requires it to be cleared before closing. Because it sits on title, it normally surfaces in a title search or in a title insurer's report.

Removal typically requires one of the following: the caveator's consent and a signed withdrawal or discharge, a court order, or evidence that the caveat has lapsed under provincial rules. Some provinces place time limits on certain caveats, and procedures differ, so the current requirements should be confirmed with the provincial land titles office or a real estate lawyer.

A short example

Suppose you sign a purchase contract and pay a deposit, but the seller later tries to sell to another party. Registering a caveat protects your contractual interest and signals to any other purchaser or lender that your claim exists. The caveat does not transfer ownership on its own; it preserves your position until the matter is resolved or the transaction closes.